Is Great-West Lifeco Still Attractively Priced After Strong 2025 Performance?

Whether you are already holding Great-West Lifeco or considering adding it to your portfolio, you are likely eyeing its recent momentum with heightened curiosity. The stock has not just edged upward; its year-to-date return stands at 20.8%, capping off a remarkable 12-month stretch with a 28.3% gain. If you zoom out further, Great-West Lifeco’s three-year return sits at 120.4% and an impressive 164.8% over five years. These numbers point to a potent blend of steady growth and strong market confidence.

What is driving this kind of sustained growth? Recent months have seen market watchers reward steady insurers like Great-West Lifeco amid broader shifts toward stability and reliable dividends. As investors continue to reassess risk and the value of consistency, Great-West Lifeco has emerged as a favored pick within its sector. The last 30 days brought another 4.0% price bump, and the stock was up 2.9% in just the last week, a signal that investor optimism has hardly waned.

But with all this action, is Great-West Lifeco running ahead of itself or still trading at an attractive price? That is precisely where a valuation check matters. By taking a close look across multiple valuation lenses, the stock scores a 3 out of 6 on our value checklist, suggesting there is real debate about how much further this run has to go and where hidden opportunity or risk may still be lurking.

In the next section, we will break down the core valuation methods used by analysts to assess opportunities like Great-West Lifeco, and at the end of the piece, we will share a perspective that can help you put all the numbers in their true context.

Great-West Lifeco delivered 28.3% returns over the last year. See how this stacks up to the rest of the Insurance industry.

Approach 1: Great-West Lifeco Excess Returns Analysis

The Excess Returns valuation model estimates a company's intrinsic value by focusing on its ability to generate returns above the equity cost of capital. This method examines how effectively Great-West Lifeco can deploy shareholder funds to earn profits that exceed its capital costs, which is a critical marker of long-term value creation.

For Great-West Lifeco, the numbers are compelling. The company currently reports a Book Value of CA$28.78 per share and is projected to maintain a Stable EPS of CA$5.20 per share, based on weighted future Return on Equity estimates from six analysts. The firm's Cost of Equity stands at CA$1.79 per share, indicating its annual Excess Return is CA$3.41 per share. The average Return on Equity is 17.36%, and the Stable Book Value is estimated at CA$29.93 per share, which reflects expectations for sustained growth and prudent capital management.

Based on these figures, the Excess Returns model estimates Great-West Lifeco’s intrinsic value at CA$131.22 per share. This suggests the stock is currently trading at a 56.8% discount to its intrinsic value, highlighting a considerable undervaluation by the market.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Great-West Lifeco.

Our Excess Returns analysis suggests Great-West Lifeco is undervalued by 56.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Great-West Lifeco Price vs Earnings

The Price-to-Earnings (PE) ratio is widely considered the go-to valuation metric for profitable companies like Great-West Lifeco, since it directly links a company’s stock price with its actual earnings power. A reasonable PE gives investors a quick sense of how much they are paying for each dollar of profit. This makes it especially helpful when a company is generating steady, predictable earnings year after year.

Growth prospects and risk levels both play an important role in what counts as a "fair" PE ratio. Companies with robust earnings growth or lower risk profiles typically justify higher PE ratios, while those facing uncertainty or slowdowns are usually valued at a discount. Great-West Lifeco is currently trading at a PE ratio of 14.06x, which is slightly below the peer average of 14.27x and above the broader Canadian insurance industry average of 12.30x. This signals the market is pricing Great-West Lifeco somewhere between its direct competitors and the overall sector benchmark.

The proprietary “Fair Ratio” calculated by Simply Wall St draws from a broader toolkit, taking into account not only the company’s earnings growth but also profit margins, industry positioning, market cap, and risk profile. This yields a Fair PE Ratio of 13.98x for Great-West Lifeco. Unlike a simple peer or industry comparison, this approach reflects the nuances of the business and its wider context. By putting the current PE ratio of 14.06x alongside the Fair Ratio of 13.98x, the stock is valued almost exactly in line with justified expectations. This suggests no meaningful discount or premium at today’s price.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Great-West Lifeco Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story for a company: your view on where it is headed, why, and how those insights translate into forecasts for revenue, profit, and margins. By connecting the dots between a company’s business strategy, its future numbers, and a fair value estimate, Narratives tie the qualitative story directly to the quantitative outlook.

Narratives are an easy and accessible tool on Simply Wall St’s Community page, used by millions of investors to move beyond standard ratios and dive into what really matters: your assumptions about the business and how they stand up against new information. Narratives help you decide when to buy or sell by comparing your calculated Fair Value (based on your story and forecasts) to the market Price, and they dynamically update as news, earnings, and market shifts come in.

For example, suppose one investor believes digital transformation and demographic trends will boost earnings and fair value as high as CA$61 per share, while another focuses on execution risk and shrinking margins, valuing Great-West Lifeco closer to CA$45. Both Narratives reflect each person’s unique perspective, helping to make a truly personalized investment call.

Do you think there's more to the story for Great-West Lifeco? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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